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A-GAME
HUNTER
FARMER
CAPTAIN
PROSPECTOR
SPECIALIST
Introduction
Xactly was founded with the mission to help every company
lncent Right. Building out a sales team carefully and providing the
right incentives for the various sales-related jobs helps growing
companies be more successful and get more out of sales.
In this report, youll learn:
How dividing sales labor can help you increase revenue
When splitting a sales team makes a growing business
more efficient
How different sales jobs require different rewards to motivate
prime behavior
Prospectors (1 prospector
for every X Hunters)
Farmers, once there are
sufficient existing customers
to manage.
A Captain to manage the
complete team
Make it immediate
A reward that trails action
by more than a few weeks
loses its effectiveness.
According to a recent CSO
Insights survey, 40.9 percent
of companies say they need
help paying their sales reps
in a timely fashion.
Now that youve reviewed the types of rewards, consider your target
salary carefully. We recommend that customers access salary data
from companies like PayScale.com or other recognized providers.
Keep your team focused by limiting the number of quotas each
sales role carries to no more than three. Sales teams with too many
goals arent able to zero in on the ones that mean the most to the
company and to their bottom line. Manage the goal setting for your
sales team in the incentive compensation plan.
When To Recognize The Deal? Payment Triggers
Do you pay when the money is in the bank or when the deal is
signed?
Bookings: The majority of subscription-type product
compensation plans pay out when a deal is booked.
Cash collections: If there is a significant problem with a
discrepancy between bookings and cash collected, this can
be added as a payment rule for clawbacks or alternatively
holdbacks. In some cases a higher commission rate is offered for
payments made up front. This is typically used by firms that are
balancing their financing needs through a combination of cash
collections and debt.
When To Cut That Check
Our research into habits and successes of our user base shows
that many companies suffer with spikes in revenue that coincide
with the end of goal or commission measuring periods. This
reflects that sales representatives are indeed responding to what
their sales compensation plan is telling them, however, they are
doing it in a way that is constricting revenue flow.
Xactly research has found that companies see a spike in crediting
transactions to sales people at the end of each quarter and again,
this time larger, at the end of the year. Accepting spikes seems
to be a part of setting incentive deadlines. To manage spiking
efficiently, and ensure you are getting all that you can from your
sales people at the beginning and the end of each quarter,
consider combining monthly, quarterly and annual goals.
Rewarding The Divided Team
Once these important general principals of Incenting Right are
grounded in your planning, you can begin to look at the new team
youve built to support your growing business. Each one of the
new roles youve created has different goals and different
What to Reward?
Most companies dont want to pay sales people an annuity a
fixed sum of money every year. Thats what can happen when
Farmers receive a percentage of the revenue generated by
customers who would automatically return regardless of the
farmers efforts. Its often a worry that such an arrangement wont
inspire sales people to do more.
So, if your barrier to return is low, the percentage of a farmers
salary that is based on customer retention either as a percentage
of revenue or a flat bonus should be small. However, if your
customers arent loyal on average, you may want to increase this
reward.
You also want to reward farmers for their harvest upsells or
add-ons to orders. Yet if rewards tilt too much in this direction, you
may be encouraging unnecessary upsells that could disservice
customers.
Ensuring balance between the retention and the upsell motivations
with a focus on stability, or base salary, encourages Farmers to
build relationships while recognizing exception efforts.
Rewarding Sales Support: Prospecting
In some businesses, the sales team that does this is known as
the cold callers. In others, they are called prospectors. While
they create the opportunity for the sale, they are not the people
pushing at the final point to close the deal. That means less of their
pay should be variable than an account executive, because they
have less influence over the final result.
Job Specific Goals
Consider the jobs objective, to bring in leads, and your objective,
to grow the company through increasing sales.
Base prospectors variable pay on both of their goals. Founding
a portion of the reward on passing leads to account executives
and a portion on the amount for which final deals close. That
way you are rewarding for your ultimate goal profits and the
prospectors part in the process leads.
Additional Resources on
the Xactly website:
Guides:
www.xactlycorp.com/
resources/guides/
Webinars:
www.xactlycorp.com/
resources/webinars/
Blog:
www.xactlycorp.com/blog/
Variables To Consider:
How technical is your product vs. your potential customer? Is it
a difficult demo?
Is the concept you are selling a new one to perspective
customers?
Will the support person need to respond to competitive claims
during demos?
Anything that increases the difficulty of the support job should
increase the percentage of variable pay available to your
Specialists.
Conclusion
As companies grow, specializing sales team members will increase
efficiencies and improve the bottom line. By developing plans
based on best practices and considering benchmarks, business
leaders can motivate these teams to fulfill their unique goals. While
all incentive plans are built around general incenting guidelines,
each team will need goals and quotas that reflect its own
objectives.
Xactly Corporation, 225 W Santa Clara St, Suite 1200, San Jose, CA 95113
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Data Management, Xactly Incent, Xactly Incentive Estimator, Xactly Incent Express, Xactly Modeling,
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